Wage growth is clearly accelerating if you look at it this way

The appearance of
stagnant wages across the country — despite falling
unemployment rates and a growing economy — has been the source of
a lot of debate among economists and everyone else interested in
the trajectory of their paychecks.

However, the wage growth story is a nuanced one. While the
national average wage growth might be going sideways, that's not
be reflective of wage growth within individual industrials and
job levels.

One reason why this isn't translating in the national averages is
because the national averages don't adjust for the fact that
low-wage jobs are on the rise.

"If the data are recalculated using fixed pre-crash employment
weights, wage growth is now running at about 2.3% year-over-year,
a bit more than the 2.1% increase in the published numbers in the
year to March," Pantheon Macroeconomics' Ian Shepherdson notes.
"Moreover, as our first chart shows, the trend in the
fixed-weight series clearly is accelerating, unlike the flat
trend in the published numbers."

Check out the darker blue line.

Pantheon
Macroeconomics

Shepherdson believes the national averages could soon get a boost
as growth in higher wage jobs picks up.

"Right now, we think developments in the labor market point to
the gap narrowing over the next year, because patterns of job
growth are shifting, and the rate of growth of payrolls in higher
wage sectors is catching up with growth in lower wage sectors,"
he said.

"This distinction matters, because the wage and salary data in
the employment costs index, which is the Fed’s preferred measure
of wage pressure, is adjusted for shifts in employment by sector
and occupation," he said. "The ECI measure of private sector
wages rose at an average annualized rate of 2.7% in the second
half of last year, and we are very keen to see what happened in
the first quarter of this year. A continuation of the recent
quarterly pace would lift the year-over-year rate of increase to
2.8%, the highest for seven years and double the 1.4% low
recorded in 2009."

A jump in the ECI could also put pressure on the Fed to tighten
monetary policy sooner than later.

"This would be enough, in our view, seriously to damage the
doves’ argument that the labor market remains so slack that the
Fed can safely leave monetary policy settings at emergency
levels."